The construction and operation of undersea pipelines and power cables are a crucial component of the global energy infrastructure, but these projects, indispensable for ensuring energy security and international connectivity, present significant legal, financial and operational challenges. Their complexity lies not only in the technical nature of the works, but also in the associated legal implications and risks – including growing geopolitical concerns – that require strategic management by investors, governments and operators.
From the beginning, the construction and maintenance of sub-sea pipelines and submarine cables (especially those in deep waters) present extraordinary challenges. Marine environments are characterised by extreme conditions, such as high pressure, low temperatures and corrosion, which require the use of advanced technologies and materials.
These projects must also consider the strict constraints imposed by environmental legislation, both at the international and regional level, such as the UN Convention on the Law of the Sea, which establishes fundamental principles for the protection of the marine environment and the management of natural resources.
Once a project enters the operational phase, it remains vulnerable to other risks. These include fishing activities, anchoring and natural phenomena, such as earthquakes or underwater landslides, that can cause damage to cables or pipelines, thus necessitating complex and costly repairs. The logistics of such interventions require specialised vessels and highly qualified personnel, with costs that can weigh significantly on project budgets.
A particularly sensitive aspect of these projects is their exposure to geopolitical risks. Submarine infrastructure is increasingly exposed to potential hostile actions, requiring enhanced co-operation between states, regulators and private operators.
The vulnerability of these assets has been highlighted by recent incidents such as the Nord Stream pipeline explosions, which raise complex questions, both legal and operational, particularly regarding the classification of such actions as acts of aggression in international law.
Issues of submarine infrastructure are inevitably intertwined with those of national security and instruments such as golden power and the provisions on the Italian National Cybersecurity Perimeter represent extraordinary measures taken to protect these strategic assets. However, the underwater dimension is not specifically addressed in many European regulations that outline security standards for critical infrastructure.
Tricky regulatory waters
The legal regulation of submarine infrastructure, such as cables and pipelines, constitutes a complex and fragmented area, with numerous interacting national, European and international regulations that consider the specificities of the underwater context, including seabed, water column and surface. While the installation, maintenance and protection of these infrastructure projects requires a co-ordinated approach, this still seems like a distant ambition.
A key element of complexity is state sovereignty, which emerges with urgency when such infrastructure crosses international waters or exclusive economic zones. Article 79 of the UN Convention on the Law of the Sea grants coastal states the right to establish conditions for the protection of cables and pipelines only within their territorial waters. Infrastructure located beyond those territorial waters does not fall under full state jurisdiction, thus limiting sovereign intervention.
The lack of a clear legal framework is further accentuated by the absence of a strict definition of “armed attack” for incidents involving submarine infrastructure outside state jurisdictions. The regulatory ambiguity is further aggravated for networks used for both civil and military purposes, which complicates the attribution of responsibility and the legal qualification of attacks. An evolution of international law is essential to establish clear rules to protect these strategic infrastructure assets.
In these circumstances, the balancing of public and private interests is also often under scrutiny, especially when ownership of these assets is in the hands of private or public entities of foreign states. The Nord Stream 2 case highlighted the need to apply European regulations to prevent monopolies and ensure a balance between energy security and free competition.
Mitigating the risks
For investors, sub-sea pipelines and submarine cables represent both a strategic opportunity and a source of risk. Investment security depends on careful planning and the availability of legal and financial instruments to mitigate risks.
Rigorous due diligence during the preliminary project phase allows the identification of major critical issues, such as technical, environmental and geopolitical risks. Contractual clauses and allocation of liabilities are a key element to protect investors. Force majeure provisions, for example, protect against the consequences of unforeseen events such as natural disasters or geopolitical conflicts.
Considering the high level and number of risks, it is essential to determine liability in the event of disruptions or damage both during construction and operation, and responsibility should be clearly allocated through contracts between the actors involved, which include builders, operators and insurers.
Equally important are dispute resolution mechanisms, which ensure that any disputes between the parties are resolved quickly and efficiently, avoiding protracted court proceedings. The creation of emergency funds and the acquisition of comprehensive insurance policies can also help reduce exposure to residual risks. Maritime policies cover a wide range of risks, from physical damage to business interruption to the ever-present threats of cyberattacks, while political risk insurance offers protection against expropriation, violence or government action that could jeopardise the project. These contractual instruments are the backbone of risk management for all parties involved.
Furthermore, collaboration with multilateral institutions, such as development banks or international organisations, offers additional guarantees through political and legal support. Government incentives, such as subsidies and tax breaks, are a further element of security for investors, especially in projects considered strategic.
A safe way forward?
While sub-sea pipelines and submarine cables remain crucial for global energy security and international connectivity, they are vulnerable to risks and represent a global challenge technically, legally and strategically.
A co-ordinated approach, involving states, international organisations and private actors, is essential to ensure the protection and sustainability of these assets. Within the context of increasing global interdependence, the definition of a clear regulatory framework and the promotion of international co-operation are essential to safeguarding the resilience and security of submarine infrastructure.
However, despite their complex nature – undersea pipelines and sub-sea infrastructure are likely one of the most complex types of projects an investor could be involved in and should not be rushed into – there are plenty of ways an investor can mitigate the risks to which these essential and critical infrastructure assets are exposed to.
Catia Tomasetti is a partner and the leader of the infrastructure, energy and ecological transition focus team at Italian law firm BonelliErede. She is based in Rome